Federal government will restructure a total of 23.7 trillion naira ($53 billion) in short-term loans owed to Central Bank of Nigeria to 40-year debt at 9% interest, President Muhammadu Buhari said in a letter to the National Assembly seeking approval for the transaction.

Africa's largest economy has struggled with low revenues due to crude theft in its oil-producing region. Oil theft cost it more than $2 billion during the first eight months of this year, a Senate investigation found in November.

Economists say the federal government is spending more on debt repayments than on education and health, but Buhari has said his government had no choice but to borrow its way out of two recessions in the last seven years.

Buhari's party has a majority in the parliament, which has never turned down any of his requests for approval.

Nigeria's economy has started to grow, but is fragile and the performance of its dominant oil sector is weak.

Last month, Fitch downgraded Nigeria's rating to 'B-' with a stable outlook, in part because of a deterioration in its debt servicing.

Buhari said the government owed 22.7 trillion naira ($51 billion) as of Dec. 19 to the CBN, in temporary advances, which he described as "short-term or emergency finance to fund delayed government expected cash receipts".

In a letter to parliament dated Dec. 20, Buhari sought approval for an extra one trillion naira advance to government from central bank.

This is in addition to Buhari's request this week for an extra 819.5 billion naira ($2 billion) in 2022 spending, to be financed by local borrowing.

Nigeria's total public debt climbed 3% to $103.3 billion in the second quarter, driven by local borrowing. The budget deficit to revenue ratio hit 74% this year and could rise to 111% next year, finance ministry data showed.

The government did not disclose the level of interest currently being paid on the debt that is to be rescheduled.

($1 = 446.13 naira)

Reuters